Sabtu, 09 Juni 2012

Airlines business plan sample (3)

 

Management Summary

BalkConsort is putting together what it expects will be a solid management team combining extensive aviation industry experience with significant experience in finance, accountancy, and management. An initial project team is in place. As more advanced planning continues on the airline and investment is in place, the full core management team will be finalized and its members brought on-board.

More than in most businesses, management is critically important to an airline, and especially an airline envisaged as this one is. To reiterate a point made early in this plan, the right management team is seen as the first and foremost key to the success of the overall venture. We endeavor to have such a team.

6.1 Organizational Structure

Reflecting the overall nature of the organization envisaged, there is very little hierarchy in the organizational plan for the airline. In an operation where safety and accountability are so much at issue, obviously someone has to be in charge, and there also have to be clear lines of authority (and expertise) in the operational aspects of the airline. But beyond that, the organization is designed around flexibility, a high level of personal accountability and responsibility, and common cross-training and sharing of responsibilities as need arises and circumstances permit.

The levels of organization (reflected in the personnel and salary chart in the Personnel section of this plan) are as follows:
  • President and chief executive officer (who reports to the Board of Directors of the airline company).
  • Vice president and general manager.
  • Functional vice presidents for the core areas of commercial activities, finance, and operations.
  • Directors covering sales and marketing, communications, human resources, flight safety, flight operations, ground operations, maintenance, and information systems.
  • Managers in sales and marketing, as well as in station management functions.
  • Professional, engineering, ground handling, service, and other support personnel.
On the flight side, which reports to the director of flight operations and also responds to the director of flight safety, there are only three levels of personnel:
  • Captain;
  • First officer;
  • Flight attendant.
Salary scales and levels of authority have been simplified and based on a rational scale allowing for similar levels, though of different natures, of functional work to be compensated at the same pay levels. The overall objective is to foster an atmosphere of cooperation and shared responsibility to the overall mission, which is to provide the customer and client with the best possible, safest, and most satisfying experience with the airline. Cross-training and cross-functioning are important parts of the organization plan, as explained in more detail elsewhere in this document.

6.2 Management Team

A complete management team, covering the elements of administration, aviation, and finance, is being assembled. This team brings together a wide range of skills and backgrounds covering the key areas needed to form, launch, and operate the airline, and from a range of national origins.

6.3 Management Team Gaps

It is premature to speak of management team gaps until a core management team is named. The individuals who will play leading roles with the new airline will need to possess the widest possible range of the requisite skills. The current project team believes investors in the airline will want to play a key role in helping formulate core management. Once primary investment is established, that step can be undertaken, and it is anticipated that the core team will be finalized quickly.

The new airline will need people with skill, experience, energy, and vision to head up and serve in such areas as information management, flight safety, aviation operations, aviation maintenance, ground operations, sales and marketing, communications, and human resources management. Also good pilots, co-pilots, cabin crew members, and ground staff, and administrative staff.

BalkConsort anticipates putting together the best possible airline management team in the business, one that also shares the common vision of what this new airline truly can be and what it can become.

6.4 Personnel Plan

Along with aircraft acquisition and operating costs, personnel costs represent one of the two largest cost factors faced by the new airline. Additionally, the airline's personnel will largely determine the success of the venture. Therefore, it is crucially important to develop and implement an effective personnel operations and compensation plan.

The Personnel Plan for the new airline reflects the stress on the use of technology to reduce staffing and costs, and the concomitant stress on customer service. Consequently, staffing is heavier (with individual function directors) in such areas as information technology and oversight of such functions as human resources, flight safety, flight maintenance, and ground operations than might otherwise be the case with a smaller regional airline. On the other hand, functions such as sales and marketing, bookkeeping and finance, and personnel management are reduced, with the assumption being that the effective use of advanced, cost-efficient informational technologies in these areas will make up for the reduced staffing, resulting in significant cost savings while providing superior results at less effort.

It is assumed, based on the experience of other regional airlines in Europe, that something on the order of 60-70 percent of all reservations and bookings will be made electronically, and such passengers will be ticketed and checked-in electronically using special electronic check-in kiosks such as those employed successfully by the U.S. carrier Continental Airlines, leading to major cost savings in areas such as sales, reservations, and ground check-in staffing, as well as in commissions paid out to outside travel agencies.

Staffing in the sales and marketing area is aimed at targeted customer contact to generate corporate and group business, rather than individual sales, and to develop special marketing programs designed to generate significant increases in both passenger and cargo business. Responsibilities will be divided along both regional and functional lines, with three regional sales and marketing managers (notionally responsible for Western Europe North, Western Europe South, and Southeast Europe & Turkey) and two targeted, global sales and marketing managers (one responsible for special sales aimed specifically at the peak traffic/special flights/holiday travel/charters market, the other for air cargo sales), reporting to one director of sales and marketing. Additional personnel will answer customer inquiries and take reservations on the telephone at central headquarters, with phone calls forwarded to them from throughout the airline market area, and also will respond to e-mail/website-forwarded inquiries.

All key functional positions throughout the airline, including in the sales and marketing area, are backed up by professional support personnel, most of whom will be cross-trained in different areas, so there will always be coverage of all key functional areas as well as back-up support when work demand requires it.

In the ground-service area, the airline will utilize its own personnel to the extent practical in order to assure a more consistently positive experience for the passenger. All major destinations will be staffed by airline personnel, while at some smaller and more remote destinations, or where local practice or requirement dictates it, ground handling and service may be contracted out to local service providers.

Even in such cases, efforts will be made to utilize spare flight crew personnel to assist with oversight of ground services and respond to customer needs, again stressing the airline's focus on cross-training. Finally, as revenues and passenger demand increases, the Personnel Plan can be expanded to provide additional ground service personnel at key locations and to expand the number of locations where the airline provides its own ground-service staffing.

Again through the use of e-ticketing, e-check-in, and e-baggage tracking, ground-service staffing requirement will be very light compared with a more traditional organization. Particularly given the fairly light flight scheduling at most locations and the convenient size of the projected aircraft, check-ins should be quick and easy, with little waiting in line or fighting with crowds - major marketing advantages as well.

Given the airline's motto, "We have a job to do, and we do it every day - for you!", cross-training and cross-functioning will be core elements of the new airline's personnel-management approach. Everyone will be inculcated with the spirit that she or he is personally responsible for the passenger and the client having a positive experience when in contact with the new airline. Everyone, from the president on down, will be familiar with (and participate in) virtually every aspect of the work and customer-service process (a method employed successfully by the former PEOPLExpress and other "people-oriented" carriers and other successful service businesses). While no one will expect (nor want) a receptionist to fly the airplane, nor a sales manager to perform engine repairs, nor for that matter a pilot or flight attendant to tend to the bookkeeping, common customer-service functions like check-in, gate monitoring, baggage handling, and answering customer inquiries can and should be performed from time to time by any and all available personnel. This process also requires, however, that personnel receive actual training and experience in these various areas, so they do not become more of a hindrance than a help.

Even the airline's uniforms will project an image of ordinary people doing extraordinary work to please and make the passenger feel comfortable. There will be a stress on informality, utilizing "non-uniform" uniforms to again stress the airline's work ethic and customer-service orientation, making both employee and client feel more at home. This approach also is in keeping with today's trend toward greater informality and equality in the work place, and away from the stilted authoritarian way of the past.

Finally, the proposed hierarchy and salary structure is designed to be both economical as well as sufficiently attractive and competitive to enable the airline to recruit good, qualified personnel. At the same time, in keeping with the overall ambience of the airline, it also stresses relative equality and fairness in its structure. A good benefits package, consistent with, and perhaps better than, available elsewhere in the industry or related industries, and the more abstract benefits of being part of a well-respected, well-functioning, professional, winning team, also will be elements attracting good employees to the new airline and keeping them on the team.

There are only about 10 pay grades provided for in the salary plan for the entire airline, including executive-level salaries, with jobs that may be markedly different in terms of function, but similar in terms of experience required, difficulty, and importance, sharing the same pay grade.
Most subordinate grades within given functions are based on a set percentage of higher-level salaries within the same general function. In addition, the plan for pay increases is straightforward and fosters clarity and understanding, rather than anxiety and unhealthy competition, among employees.

Everyone, across the board, from top to bottom in the organization, who performs satisfactorily will receive a 10 percent pay increase at the end of the first year of service (deemed to be the most difficult), and a 5 percent pay increase at the end of each subsequent year of service (with adjustments made only on the basis of specific across-the-board or localized issues like inflation, currency devaluations, and so forth).

Unsatisfactory performance merits only one of two remedies: Dismissal, or placement on a limited probationary regime to determine if problems can be remedied and the employee brought up to standard within a given time limit. Otherwise, there is no room, and no cause, for protracted anxiety on the part of the satisfactory employee concerning such issues as pay raises and related issues. The only other issue is the possibility of promotion to a higher position within the organization, and the airline will endeavor to promote its best from within whenever possible.

One other issue worth considering, though it is not included in the current plan, is the possibility of offering a bonus to all employees, as a specific percentage of their pay, when the airline shows a particularly profitable year to encourage additional "pride of ownership" and esprit de corps.
A summary Personnel Plan for the first three years of operations follows in the table below, and a detailed monthly plan for the initial year is provided in the appendix.

Personnel Plan

Year 1 Year 2 Year 3
Production Personnel


Captains (3 per aircraft) $585,000 $1,018,500 $1,448,175
First Officers (3 per aircraft) $468,000 $814,800 $1,158,540
Flight Attendants (9 per aircraft) $526,500 $916,650 $1,303,360
Other $59,062 $557,794 $856,370
Other $0 $0 $0
Subtotal $1,638,562 $3,307,744 $4,766,445
Sales and Marketing Personnel


Director of Sales & Marketing $60,000 $66,000 $69,300
Regional Sales & Marketing Mgrs (3) $132,000 $157,200 $165,720
Special Sales & Marketing Manager $40,000 $52,400 $55,240
Air Cargo Sales & Marketing Manager $40,000 $52,400 $55,240
Sales & Marketing Assistants (6) $97,500 $117,600 $124,515
Cust. Service/Reservations Assts (12) $108,000 $141,000 $149,700
Other $0 $0 $0
Subtotal $477,500 $586,600 $619,715
General and Administrative Personnel


President & CEO $180,000 $198,000 $207,900
Vice President & General Manager $144,000 $158,400 $166,320
Vice President Commercial $126,000 $115,500 $121,275
Vice President Finance $126,000 $115,500 $121,275
Vice President Operations $126,000 $115,500 $121,275
Other $0 $0 $0
Subtotal $702,000 $702,900 $738,045
Other Personnel


Director of Communications $54,000 $59,400 $62,370
Director of Human Resources $54,000 $59,400 $62,370
Director of Flight Safety $54,000 $59,400 $62,370
Director of Flight Maintenance $54,000 $59,400 $62,370
Director of Ground Operations $54,000 $59,400 $62,370
Director of Information Systems $54,000 $59,400 $62,370
Station Managers (1 per major station) $140,000 $374,000 $404,200
Ground Service Pers (3 per maj station) $315,000 $837,925 $909,450
Maintenance Engineers (8) $200,000 $260,000 $275,200
Bookkeeping & Finance Personnel (3) $64,000 $78,400 $81,920
Information Systems Personnel (5) $120,000 $132,000 $138,600
Professional Support Personnel (3) $68,000 $78,800 $82,960
Secretarial/Admin Asst Personnel (3) $51,000 $59,100 $62,220
Customer Relations Personnel (2) $40,000 $52,000 $55,040
Other $0 $0 $0
Subtotal $1,322,000 $2,228,625 $2,383,810
Total People 84 90 94
Total Payroll $4,140,062 $6,825,869 $8,508,015


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